Correlation Between McCormick Company and WH Group
Can any of the company-specific risk be diversified away by investing in both McCormick Company and WH Group at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining McCormick Company and WH Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between McCormick Company Incorporated and WH Group Ltd, you can compare the effects of market volatilities on McCormick Company and WH Group and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in McCormick Company with a short position of WH Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of McCormick Company and WH Group.
Diversification Opportunities for McCormick Company and WH Group
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between McCormick and WHGLY is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding McCormick Company Incorporated and WH Group Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WH Group and McCormick Company is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on McCormick Company Incorporated are associated (or correlated) with WH Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WH Group has no effect on the direction of McCormick Company i.e., McCormick Company and WH Group go up and down completely randomly.
Pair Corralation between McCormick Company and WH Group
Considering the 90-day investment horizon McCormick Company Incorporated is expected to generate 1.38 times more return on investment than WH Group. However, McCormick Company is 1.38 times more volatile than WH Group Ltd. It trades about 0.12 of its potential returns per unit of risk. WH Group Ltd is currently generating about 0.12 per unit of risk. If you would invest 6,835 in McCormick Company Incorporated on January 20, 2024 and sell it today you would earn a total of 435.00 from holding McCormick Company Incorporated or generate 6.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
McCormick Company Incorporated vs. WH Group Ltd
Performance |
| Timeline |
| McCormick rporated |
| WH Group |
McCormick Company and WH Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with McCormick Company and WH Group
The main advantage of trading using opposite McCormick Company and WH Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McCormick Company position performs unexpectedly, WH Group can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in WH Group will offset losses from the drop in WH Group's long position.| McCormick Company vs. ConAgra Foods | McCormick Company vs. Campbell Soup | McCormick Company vs. Kellanova | McCormick Company vs. General Mills |
| WH Group vs. Kellanova | WH Group vs. Lancaster Colony | WH Group vs. The A2 Milk | WH Group vs. Altavoz Entertainment |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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